My Strategic HCM Website (About Human Capital / my first book)

Strategic Dynamics (About my company)

JonIngham.com (About me!)

The Social Organization website (About Social Capital / my second book)

Sunday, 30 November 2008

I've got some experience of salary reductions from the last Russian financial crisis at the end of the 1990s. They're never going to be easy to implement and so I was concerned to learn from my Singapore hotel that the city state is slashing civil servant wages.

I agree with Management Issues that it's interesting to see the public sector taking a lead in doing this. The UK would certainly benefit from following the lead and doing something about its public / private sector pensions divide.

But there's a growing need for other sectors to start thinking about how they can reduce compensation costs too. In particular, I think it's the next thing financial services firms need to think about once they've got their heads around 'maluses'.

I'd recommend readers who aren't convinced of the need to make some rather unconventional changes at the moment to consult some great posts by Know HR. As Frank Roche explains:

"The world economy is in Holy Crap Mode. If you’re clinging to old HR rules because it’s the only thing you know, it’s time to practice this phrase: “You want fries with that?”

"Advances in large-scale database technologies had made it economically possibly by the late 1980s to store the full transaction histories of customers. The early successes of airline frequent-flier programs and credit card reward schemes in the United States had begun spilling over to Europe... In the United Kingdom, the clock was ticking. A company called Airmiles was already forging relationships with the retail sector to extend the redemption of mileage beyond free flights and into goods and services... 'Loyalty has emerged as one of the main weapons in the food retailers' endless battle to outdo their rivals', declared the London Times in 1995."

The book describes how it was that although second-place Tesco had launched its card first, it was third-placed Safeway with its ABC card that initially gained the advantage:

"Safeway's advantage lay not in the card itself, but in Safeway's technological ability to analyse the data. Though smaller than Tesco and Sainsbury's, Safeway was widely known as the most advanced, innovative, and aggressive of all chains in its data processing and analytic capabilities.

In the years after launch, Safeway's marketing strategy of focusing on high-spending your families began to yield the changes it had hoped for. Supported by card data, Safeway's efforts to attract this lucrative segment were producing an increase in average transaction size... But, unfortunately, the financial benefits resulting from these changes weren't appearing fast enough."

What had been an opportunity to create value soon became one to add value - something that would support existing business but could no longer different one organisation from another - and then simply to improve value for money - if that!

Safeway abandoned its card which it now called a "backpack of stones" and a "flashy, worthless piece of plastic". More recently, it has been taken over by absorbed into Morrisons which had been a much smaller rival. And Sainsbury's, which had been the market leader, has joined up with Groupe Aeroplan's Nectar reward scheme.

This is a business (vs HR) / business process (vs management process) example of the value triangle, but I think it demonstrates quite nicely how value deteriorates over time - what's creating value today becomes adding value tomorrow, and what's adding value becomes value for money next month. And the same does apply in HR. So if you're only aiming at the bottom of the triangle you've got problems, and don't be surprised when you're outsourced!

And if you're aiming at the top of the triangle, don't think that one creating value idea is going to be enough - you need to continually seek out more value, and find different ways of doing things before your competitors catch up.

And you need to find the right way for your organisation, and at the right time. Gartner's book describes how Tesco's rather different approach to its own Clubcard catapulted the chain into a market leadership position and still creates value for them today.

"What set the Clubcard apart most significantly was that every quarter Tesco mailed vouchers and discount coupons to its customers... The mailings created what the company called 'emotional loyalty'. Though expensive, every quarterly mailing generated a sales uptick... that paid for the mailing."

The key difference in Tesco's approach was their realisation that "card data would be worthless unless a company was willing to change the way it did business on the basis of what the data was saying".

This is a key sign of creating value - it's about fundamental change, not tinkering around the edges.

Of course, the key question at the moment is does creating value still matter now? Should we still be thinking about creating value or is value for money king? I'd suggest that creating value is even more important than ever, both in business and in HR. What do you think?

Saturday, 22 November 2008

I enjoyed Kennedy's retention summit even more than the main recruiting conference - shame so many people had left!

I thought my fellow presenters (shown from L to R: Derrick Barton, Center for Talent Retention; Greg Smith, Chart Your Course International, Carla Major, Vice President, Human Resources & Community Relations, Harrah's Hotel & Casino and Dick Finnegan., Finnegan Mackenzie, The Retention Firm) presented some great ideas on retention best practices, and I tried to help people think about some best fit, creating value opportunities as well. I'll come back to these sometime over the next couple of weeks.

I didn't see that many presentations at Kennedy's Recruiting conference - the pull of the sunshine was just too strong. But my favourite of those I did was from Steve Bonomo and Steve Fogarty at Adidas as this was a great combination of insight, perspective and practical experience.

Bonomo and Fogarty explained, referring to Frank Lane’s book, Killer Brands, that a brand enables a company to "derive a disproportionate amount of success… because of a compelling and differentiated expectation that comes to be associated with its name".

A true killer brand "will be chosen over competing brands—in any category, in any country, at any time, and often at any reasonable price" and its constituent elements include:

Choice: every $ you spend or will ever make depends on choice

Expectations: every choice that will be made depends on expectations

Focus: is that single, differentiating factor

Alignment: is connecting everything you do in perfect harmony

Linkage: getting that focus, that expectation carried in the minds of your people.

The key to this is the 'differentiating factor' - to find something about your company that is different in your organisation from others / its competitors, and different in kind not simply in degree. Bonomo and Fogarty recommended that people should "pull, grab, tear the essence of brand from your corporate bureaucracy and bring it to life!".

This can then be built, with design, simplicity and beauty into all relevant delivery mechanisms, eg job templates, recruitment posters etc.

For Adidas, the differentiating factor is the love of sport. Someone asked a good question - that finding this differentiating factor is relatively easy if you're into spots, or are the US Army, or Cirque de Soleil, but more difficult if you're in transportation.

Like Bonomo and Fogarty, I lean to the view that although it may be more difficult, it will still be possible.

I think the differentiating factor falls out of an organisation's big idea, or BHAG, or what I think it often more motivating, an organisation's mojo. As I've previously posted, I think this can come from something which is absolutely central to organisational strategy (like an interest in sport), or something which is a complementary focus to the main business strategy - something that will fit beside and support (if not drive) the strategy, but which will be more motivating for employees, eg corporate social responsibility (maybe the solution for the transportation firm).

Whatever it is, I also agree with Adidas, it needs to go way beyond the "canned speeches" organisations often use for this type of thing.

” Tribes are about faith - about belief in an idea and in a community. And they are grounded in respect and admiration for the leader of the tribe and for the other members as well. …There are tribes everywhere now, inside and outside of organizations, in public and private in nonprofit, in classrooms, across the planet. Every one of these tribes is yearning for leadership and connection.”

"If I hear one more person say that ‘Culture is the way we do things around here’ I will be sick. As a definition of culture it is all but useless. If that’s all it is, you’d just change the way you do things and be done with it."

Culture's such a loose phrase, and has been so overused that it's now a very nearly valueless concept. For example, Ulrich's definition, "the identity of the firm in the mind of your best customers, your firm brand or reputation", is a definition of employer brand, not, to most peoples minds, of culture.

One aspect, as Rick notes, is beliefs and assumptions. These, and values, are at the heart of what culture is generally seen to be about and is often, but now always, what people mean when they talk about culture change*. But then if that's what we mean, let's say what we mean.

And I think the three elements of organisational capability: human, organisation and social capital (the product of social leadership / communityship - see above) provide a useful breakdown too (because each of these three elements need to be managed / developed in very different ways). So in big organisational changes for example, when we're already dealing separately with values, structure, business processes etc, the word 'culture' is often used to refer to social capital.

Quite often we're really talking about alignment between these different elements, and between these and the business strategy or organisational capability.

Whatever it is, understanding precisely what we're talking about is the first step towards being able to change it effectively.

* By the way, I think changing values, beliefs and assumptions is nearly impossible, unless 1. there's enough impetus behind it - a big idea, BHAG or organisational mojo that helps clarify, articulate and focus thinking about what the change needs to be (and ensures the desired state can be a competitive differentiator). Or 2. an awful lot of energy, commitment and time going into it. Or 3. It is allowed to emerge from the organisation, rather than being sold from the top down.

Wednesday, 12 November 2008

I've just been thumbing through today's People Management, and spotted a piece by Alex Wilson (Group HR Director at BT*), 'How I got where I am today'.

Wilson notes:

"I get fed up with consultants constantly beating at my door suggesting they have the solution to all my ills. They think they can transform my life and the company but I get so many of them it’s just a pain – the equivalent of spam."

I do understand the problem, but spam we ain't. Companies can learn about 'best practice' from listening to other practitioners, and sharing knowledge between themselves. They're more likely to get 'next practice' (Rosabeth Moss Kanter's phrase) from those who are looking for, and learning from, opportunities to transform a variety of organisations (innovation generally coming from a mix of different experiences and perspectives), ie consultants.

Companies that ignore this opportunity are going to suffer as a result.

Tuesday, 11 November 2008

Ulrich's new book deals with the basic aspects of leaderships, or common rules, that he suggests can be effectively used by all leaders, regardless of their context or organisation.

It's a rather strange area for Ulrich to focus on, as he has already said that it is the piece above the leadership code, the leadership brand, that differentiate one firm from another (and therefore provide a basis for competitive advantage). But then, the basics are clearly important too.

The code consists of four parts, mapped out by two dimensions: time (near and long-term) and focus (individual and business), providing a model which will ring a bell for most HR practitioners), plus a further area: personal proficiency, at the centre.

These provide five rules for leadership:

Strategist: shape the future

Executor: make things happen

Talent manager: Engage today's talent

Human capital developer: build the next generation

Personal proficiency: invest in yourself.

Ulrich emphasises that this model provides a comprehensive structure and guidance for developing leadership capability, and that this is an improvement on a traditional shopping list of leadership attributes. But I'm still going to suggest an update to his model.

And then, I'd also want to add something on organisational effectiveness too (Ulrich himself has commented that organisational development requires a greater focus in comparison to talent management). And I'd move the strategist / executor focus to the centre of the model. So I'd end up with three areas of focus on the horizontal axis of Ulrich's model, corresponding to human, organisational and social capital, providing something like this:

OK, this model isn't based on the same level of meta research as that conducted by Ulrich and his colleagues, but I do believe that organisation design / development, and the management of people and the organisation for the accumulation of social capital, are increasingly important aspects of any leaders' role. So I think they should be included in the code.

(The leadership brand, to me, is then simply the alignment of these same aspects around a particular organisational capability, rather than simply a looser linkage to a shorter-term business strategy.)

I have used the previous and now this version of the competencies with clients several times, mainly underpinning HR capability development projects. But out of the two versions, it is the latest one that works best for me.

I've even grown to prefer it to my own version. It's the credible activist competency that makes the difference for me, which is why I link it to 'creating value' in the value triangle. The competency is about being both credible (respected, admired, listened to) and active (offers a point of view, takes a position, challenges assumptions). RBL note:

"HR professionals who are credible but not activists are admired but do not have much impact. Those who are activist but not credible may have ideas but will not be listened to."

Yes, but for me, between the two it is the activist part that will really make the difference. This is why I put strategic partnering above personal credibility in my own competency framework. But I think activism offers something even more important.

Within HR we all know we need to be strategic, but there's still a surprising range of perspectives about what being strategic means. Not that there's anything wrong with that, I just think all senior HR people need to have their own beliefs about what's important, about how they personally, and how their function will be strategic, and then develop and implement their strategy in line with this belief. Which is to me what activism is about.

Yes the belief will need to be tested and moderated over time, but I think this will result in significantly better outcomes than not having a clear belief to begin with.

I'm delivering an HR leadership programme around this activist perspective in Hong Kong next month. I'll let you know how it goes.

Monday, 3 November 2008

Ernst & Young's Middle East Human Capital Survey 2008 has found that the human capital function is gradually becoming a strategic partner to regional businesses. 55% of respondents (up from 35%!) indicated that HR is involved in strategy development and effective people management in their organisations.

This is good news given that greater economic growth in the Middle East means that it is becoming "even more explicit that an organisation’s people make all the difference. To maintain competitive advantage, businesses need to invest in people and adopt strategies, policies and practices oriented towards the development of human capital".

However, Middle East HR functions clearly still have some way to go to be real strategic partners:

Only 59% of respondents formally link performance development plans with performance assessments

Just 44% have a proper succession plan for creating an effective leadership pipeline

Only 27% use 360 degree feedback as a developmental tool.

If this applies to you, I'll be back in the UAE at the end of November, and hope to visit other countries in the Middle East next year. So get in touch.

I don't normally like to write about my consultancy support in this blog, but I guess the purpose of the last couple of posts and the survey that supports it, has been to raise interest in this area, so it seems perhaps overly reserved not to mention my perspectives on 360° feedback, and my services in this area too.

I've used various 360° tools for some time and remain convinced that they add significant value to a performance management process.

Firstly, a rounded view of performance is always going to be better than a ‘top down’ one, and so this helps deal with some of the issues raised in the recent WSJ article.

But going, beyond this, 360° feedback also helps encourages an open, feedback culture. Of course, there's lots more that can be done in this area too, and I've often thought another useful management innovation would be the use of a freephone number of probably a web system which people could use to give feedback on anyone's behaviour real-time (a bit like the lorries that ask people to give feedback on their driving perhaps: rate-my-management.com ?).

But I think the greatest value of 360° feedback comes from its focus on ‘soft’ issues (e.g. management behaviours) which are not easily measured in other ways. And for this to add value, the approach needs to be introduced carefully and appropriately - eg don't introduce it now to give more focus to behaviours so that you can cut salary increases, or to find out who you can sack! Do introduce it, if you want to start putting more investment into your leaders and other talent groups to prepare for the next upswing.

In addition, to ensure uptake within the organisation, the focus needs to be as much on the education and communication before the process and the follow up afterwards, as on the feedback process itself. And this is where my role tends to focus, as well as helping update competency systems, develop questions, providing feedback and coaching around action plans etc.

I like the tool for a number of reasons, but in particular because of the way that it combines both quantitative and qualitative feedback about observable behaviours. Any good tool is going to ask a number of quantitative questions about relevant behaviours and to also gather qualitative comments that allow the respondent to pick out any particular areas they wish to comment on. But this one, also adds some interpretation to the comments, which I think adds a lot of value to it.

Sunday, 2 November 2008

Given that my last post on the UK party leaders has gone out just before the US elections, it's an obvious follow-on to consider what would have been the feedback on Barack Obama and John McCain there.

This is my impression:

Authenticity: Obama ahead, given more consistency over the campaign

Vision: Obama ahead, as McCain's differentiation from Bush seems to have reduced

Not too surprising, since it was conducted before Gordon Brown's recent resurgence, David Cameron has been scored most strongly on each of Jack Welch's leadership competencies, with Nick Clegg somewhere between him and Gordon Brown - who trails the other leaders in each competency with the exception of resilience. Couraud's feedback report notes:

Resilience (This person stands firm, come what may)

The majority of reviewers consider this to be Gordon’s strongest area, scoring him above average for the group (which consists also of Gordon’s counterparts, David Cameron and Nick Clegg). However, many reviewers qualify their praise. Typical comments are “Gordon soldiers on in the face of adversity”, “he is resilient – in the same way as a rhinoceros hide is resilient” and “even in the face of appalling opinion polls he seems intent on keeping going at his own pace and to his own agenda.”

Though he “stuck out 10 years with Blair and is firmly determined to keep his dream job”, the cracks are beginning to show and there is a sense amongst some reviewers that this strength in resilience could be undermined by perceived policy U-turns. Some comment that for Gordon it has become “self preservation at all costs” and “he’ll hand on because he risks annihilation if he goes to the country”

Email me (info [at] strategic [dash] hcm [dot] com) if you'd like to receive a copy of this, or all three, feedback reports. And contact Couraud here if you'd like more information on getting similar reports for leaders in your own organisation.

Writing in the Sunday Times today, Michael Portillo argues that Gordon Brown's personality traits are falling out of focus. I don't agree. I think Brown will maintain a stronger position in the polls while the economy remains as volatile as it now, but his lack of leadership competencies are going to strongly influence voter's behaviour at the next election.

And then read Wally Bock's thoughts on abolishing performance reviews at Three Star Leadership. Bock refers to a recent Wall Street Journal article which suggests performance reviews are 'ill-advised and bogus' and should be replaced by 'Two-side, Reciprocally Accountable, Performance previews'. Bock is absolutely right in explaining that it's the ongoing conversation rather than the formal set-pieces which are important, but I think, although I don't agree with ditching performance reviews, that WSJ makes some good points too. However, I'd ditch the rather ugly name, and unfortunate acronym ('TRAP'), and just call this coaching, which I think needs to be part of any performance management system worthy of this name.